T4 November 2014 Post Examination Guidance report

Transcription

1 T4 November 2014 Post Examination Guidance report General Overview The main object of this report is to give help to candidates who were not successful in the November 2014 examination relating to the EL Car Company case. This report explains the basic rationale behind the case and the suggested approach to each of the assessment criteria. It also provides a brief marking guide, general comments on the candidates scripts and a statement of common errors, including omissions, which were made by candidates. The case related to EL, a mainly family owned company engaged in the design, development, manufacture, marketing and selling of cars. Its home country was Country X, but EL had seven production plants throughout the world. It employed 45,000 people world-wide and was forecast to generate annual revenue of X$ 26 billion in EL enjoyed 4% share of the world car market and 12% of its home market. Its products ranged from small compact to premium and luxury cars. Its production, marketing and research and development activities were all established in the regional markets in which it competed. The major driving force behind the company s success was its founder, Mr. A Tan who had to relinquish his position as CEO in 2013 due to poor health. His son, Mr. B Tan took over as CEO and, recognising his own limitations, he appointed a group of four executive directors as an Advisory Committee. In its home country EL formed its own trade union to represent the interests of its workforce. This though was only of limited value to employees as it was not fully independent of the company and a potential source of conflict between workers and managers. For the financial year end 31 December 2013, EL revenue increased by 12% over the previous year. Its direct production costs were 75.6% of revenue, which resulted in a gross profit of X$ 5,823 million and an operational profit of X$ 2,283 million. Its car sales increased by 8.3% over the previous year to million. Its cash position at the end of the year was sound with a positive balance of X$ 2,572 million. Its revenue for 2014 was forecast to increase by slightly over 9% and volumes to increase by about 2% with profit as a percentage of revenue predicted to be 10%. The unseen material required candidates to: (a) Prepare a report that prioritised, analysed and evaluated the issues facing EL and make appropriate recommendations, and (b) Prepare an on the importance of correctly identifying relevant costs for financial decision making in EL. The should have included reference to the decision regarding investment in the new production plant. The should not have exceeded 10 short sentences. The T4 assessment matrix has nine criteria, each of which carries between 5 and 30 marks. It should be noted that the Logic criterion has 30 marks associated with it, 20 marks for recommendations given in the answer to part (a) and 10 marks for the answer to part (b). It was important that the candidate earned high marks in the Judgement and Logic criteria as each of these carried 20 marks within part (a). It was also important that the candidate undertook sufficient analysis to provide a sound base for discussion of the issues from which appropriate and logical recommendations could be made. The analysis should have included appropriate financial and numerical calculations, particularly those which were discernable from the unseen examination material which was rewarded within the Application criterion. 1 T4 Part B Case Study Exam Post Examination Guide - November 2014

2 The main issues contained in the unseen material were considered to be: 1. Top priority Strategic Direction EL would be affected in the long term by continued loss of market share and needed to conduct an investigation as soon as possible into why it had lost market share in the Asian and North American markets and why its competitor Company W had its most successful year for decades. The outcome of this strategic review should have provided EL with guidance as to which direction it should take. 2. Second priority Plant relocation Work had started on the relocation of the new home production plant in the west of the country. However, this needed review given the change in circumstances and a decision needed to be made on whether to carry on building in the west or abandon and build in the east. Delays might have affected future production capacity and the ability of the Company to meet its sales targets which would affect its profit. 3. Third priority Fuel efficient engine The decision as to which manufacturing method to adopt was key to the future development of the model range. The high tech option contained particular risks and may have been more expensive if the project was abandoned. This needed to be balanced against the potential demand if it was successful and the benefits of a more technical and less labour intensive manufacturing process than the low tech option. 4. Fourth priority- Supply chain management This issue referred to an on-going review of purchasing procedures. The ranking system of suppliers used by EL was out-of-date and required review in line with more recent requirements of the Company to work with cost efficient suppliers. There were also two main ethical issues: Village relocation Failure to keep records. Format of answers The format of candidates answers to part (a) was generally good. Candidates usually began with an introduction leading to very brief terms of reference, prioritisation of issues, followed by discussion of those issues. Ethical issues were discussed and advice given on how to resolve them and then recommendations were made on the issues which had been prioritised. This was the standard way of approaching the examination and generally led to a logical way of presenting the report. While the suggested format of recommendation, justification and actions to be taken was applied when candidates prepared their recommendations, candidates should not have just repeated in their recommendations what they had already stated in their discussion earlier in the report. In the discussion section, the candidate should have considered alternative approaches to resolving any particular issue which was raised. In the recommendations section the candidate should have selected the approach which he or she wished to recommend, justifying why this had been selected from the range of alternatives and then explained the follow-on actions which were necessary to implement the recommendation successfully. Low marks were awarded in the recommendations section for simply repeating what had already been said earlier in the discussion as these marks were already awarded within the Judgement criterion. 2 T4 Part B Case Study Exam Post Examination Guide - November 2014

3 Finally, most candidates provided a brief conclusion. The appendices were usually contained in an Excel file or at the end of the Word file or in a separate answer book. Part (b) was often included as an appendix which was acceptable. Once again, some candidates failed to address part (b) at all. Others missed the key points. Part (b) was worth 10% of the marks and an important part of the examination which should not have been ignored. T4 Assessment Criteria Maximum marks available Analysis of Issues (25 marks) Technical 5 Application 15 Diversity 5 Strategic Choices (35 marks) Focus 5 Prioritisation 5 Judgement 20 Ethics 5 Recommendations (40 marks) Logic 30 includes Question 1 part (b). Integration 5 Ethics 5 Analysis of issues PART (a): Technical: The purpose of this criterion was to assess the use of relevant theoretical techniques and frameworks to aid analysis of the case material. Suggested Approach: It was recommended that candidates present their technical knowledge either in the form of appendices to the main report or the relevant theories could have been discussed within the report itself. It was usually better to present the technical knowledge within the report where possible as it was then applied to the subject matter of the case material. Marking Guide: Marks were awarded for technical models and theories which were relevant to the case. It was appropriate to limit the technical knowledge displayed to five separate items. Most candidates were able to display technical knowledge principally comprising a SWOT analysis, Johnson, Scholes and Whittington s Suitability Acceptability Feasibility (SAF) framework, Mendelow s stakeholder matrix, Ansoff s Growth Vector matrix, Porter s 5 Forces and generic strategies models. Most candidates performed satisfactorily under this criterion. 3 T4 Part B Case Study Exam Post Examination Guide - November 2014

4 Many candidates limited their use of theory and models to a few which were relevant to the case which was highly appropriate. It was appropriate to produce a SWOT analysis. It was expected that the main issues from the unseen material, discussed in part (a) of the answer would have featured somewhere within the SWOT analysis, along with those ascertained from the pre-seen material. The SWOT should not have been too long but should have contained the main issues affecting the case organisation. Any model or theory used should have been applied to the content of the case material. Some candidates did name drop that is, produce a model or referred to one without using it in context. This gained no marks and wasted time. Another example was laying out a model, such as Ansoff s Growth vector matrix and then not applying it to the case material. This earned no marks. There were some candidates who did not produce a SWOT analysis at all and others who presented it with some elements missing. The SWOT analysis should have identified the main strengths, weaknesses, opportunities and threats faced by the case organisation. The candidate should have included the main issues which he or she then discussed in the answer within the SWOT analysis. A well prepared SWOT helped to assemble the priority order for discussion of the issues. Application: The point of the Application criterion was to assess how well candidates used the techniques, frameworks and calculations to support their analysis of the issues in the unseen material and to form a sound basis for their subsequent recommendations. Candidates were advised to ensure that they applied relevant models, techniques and frameworks correctly, given the unseen case material. It was important that rather than just stating the model or framework, it was presented in such a way that it provided information which was relevant to the case, enabling candidates to use the information as part of their analysis of the issues. This also applied in respect of calculations, which should have been relevant to the information given in the particular case. There was scope for relevant calculations to be made in this examination. Marks were available for the relevant application of techniques, models, frameworks and supporting calculations but only if the candidate applied them to the specific case. The principal calculations required were the comparison of the costs and benefits of continuing to relocate the new production plant in the west or moving it to the east, the capital investment in the fuel efficient engine and analysis of the supply chain weightings. Most candidates provided a SWOT analysis. It was necessary for candidates to update their pre-conceptions of the SWOT analysis in the light of the unseen material. SWOT analyses should not have been too long but should have concentrated on the essential issues which affected the case company. A common error was that many candidates failed to include the main issues that they discussed in their report within their SWOT analysis. It was clear that failure to establish the 4 T4 Part B Case Study Exam Post Examination Guide - November 2014

5 appropriate strategic direction and continuing to fall behind Company W and other major competitors was a threat for EL yet many candidates did not include this in their SWOT analysis. Similarly, its plant relocation should have been shown as an opportunity for EL but many candidates failed to show this. There were many errors in the calculations, as follows: Comparison of on-going west and east costs and benefits for the plant relocation: Failure to attempt the calculations for the plant relocation at all. A total misunderstanding of the relevant costs in particular failing to recognise that the X$ 150 million already spent in the west had already happened and should have been deducted from the X$1,200 million total cost for continuing to build in the west. Including the cost of road transport through the tunnel, which had become irrelevant as the tunnel had collapsed and might never be constructed. Failing to recognise that the cost of sea transport was now a common cost to building in either location. Failure to take account of the relevant timings of the cash flows. Failure to discount the cash flows. Using the incorrect discount rate including failing to calculate the discount rate from years 2 to 20 correctly. Failure to show the actual difference in net present values between building in the west and the east. Bringing revenue into the net present value calculations when it was clear this would be a common item and that the issue related to the cost of the two alternative production plants. Including benefits of producing in the west within the calculations for the east. Just doing a calculation for the west without considering the net present value of constructing the production plant in the east as a comparison. Capital investment in the fuel efficient engine: Failure to calculate the expected values of the net present values at all. Inability to accurately calculate the probable outcomes. Failure to take account of the residual value of the low-tech option. Discounting the residual value despite the case material stating that the X$50 million was its discounted value, i.e. in present value terms. Deducting the residual value from the probable net present value calculation for the low tech technique. Adding the values for the probable outcomes together and calling this the expected values. Multiplying the high tech and low tech net present values together and arriving at what the candidate referred to as the return. Adding the probable outcomes for high and low tech together and dividing by 2. Supply chain: Failure to attempt the calculation for the supply chain weighted values at all. Failure to accurately calculate the individual weighted scores for Companies A and B. Failure to total the weighted scores for Companies A and B. There were very few candidates who actually managed to get anywhere near the correct net present values for the plant relocation. To work these through required some thought but, as the suggested answer reveals, it was actually straightforward, providing the candidate understood the concept of relevant costing. It was clear that most did not. It is recognised that in modern times, a spreadsheet would simply enable candidates to list the costs for each location, but even had this approach been taken, the difference in the net present values between the two should have been accurately calculated, and it wasn t. This shows a fundamental lack of knowledge and understanding which would not be tolerated by most employers. 5 T4 Part B Case Study Exam Post Examination Guide - November 2014

6 Candidates needed to be prepared to systematically work through the information contained in the unseen case material and produce appropriate calculations which informed and supported their analysis and recommendations. The calculations required should have been within the scope of well-prepared candidates and within the capability of competent management accountants. Candidates needed to read the information carefully. Many of the errors listed above show a fundamental lack of understanding of the basic concepts and techniques used in management accounting. Candidates who failed this examination are strongly advised to reflect on their level of understanding of these fundamental management accounting techniques before attempting assessments in the new syllabus. Diversity: This criterion sought to assess knowledge and understanding of relevant real life situations in the same or similar context as that in which the case was set. It also assessed the recognition of commercial or organisational issues relevant to the case material irrespective of whether or not they occurred within the same industry. Candidates should have introduced relevant examples at the point where they discussed the issue in their answer. Typically, this may have occurred in the introduction, the prioritisation section, discussion of the issues, ethics or within the recommendations. The main point was that a candidate should have sought to bring in the relevant example at the point which enabled him or her to elaborate or emphasise the commentary in the answer. There was one mark available for each relevant example given, providing it was clearly stated why it was relevant. Note, a maximum of one mark was awarded for a single example or a range of general examples given in the introduction. Marks were not awarded for repeated examples unless they definitely related to different points being made. Additionally, general discussion of many real life companies in the introduction did not attract more than one mark, as they had not been related to the issues raised in the unseen material. Candidates needed to explain why the example was relevant to the point being made. This was generally satisfactory with a good range of relevant examples of the car manufacturing industry. Some candidates gave few or no examples in their answers or only gave general examples in the introduction. This was surprising given the many examples to be found within the car manufacturing industry. Strategic choices Focus: This criterion required candidates to select the business issues that were regarded as the most important and which would be discussed further within the answer. 6 T4 Part B Case Study Exam Post Examination Guide - November 2014

7 This was not a section of the report as such. Marks were awarded based on the issues which were contained and discussed within the report. There were five marks available for this criterion. It was for the candidate to determine the most relevant issues in the case that should have been discussed. Some issues might have been discussed as a business as well as an ethical issue and this was perfectly acceptable. An example in this case was the village relocation. Most candidates were able to identify appropriate issues in the case and therefore gained good marks under this criterion. Prioritising an issue and then not discussing it. This meant that the Focus mark for that particular issue was not then available. Prioritisation: Under this criterion, candidates were required to rank the issues and to state clearly and concisely the justification for that ranking. The ranking should have reflected the impact of the issues on the particular organisation, which may have included their urgency. The priorities should have been presented early in the candidate s report under their own heading. The priorities should have been set out with the issues ranked as either 1 st, 2 nd, 3 rd etc. Each should have been justified with a concise explanation of why it had been ranked in such a position. High marks were awarded if the candidate presented the most important issues with a good rationale as to why they were ranked as main priorities. Generally, candidates presented their prioritised issues in an appropriate form. The SWOT analysis helped to clarify which were the most important issues to be addressed. Failure to prioritise Strategic Direction as the first or second priority despite it having such a significant impact on the company. Judgement: This criterion assessed the candidates exercise of commercial and professional judgement in discussing the key issues which were prioritised. 7 T4 Part B Case Study Exam Post Examination Guide - November 2014

8 It was important that candidates discussed the impact the prioritised issues had on the organisation and what alternative actions, with reasons, could have been taken to address them. This should have included discussion of the relevant supporting analysis drawn from the Application criterion. If calculations were made within an appendix, for example the relocation of the new production plant it should have been used in support of the points made under that relevant heading within that section of the report. The purpose of undertaking the analysis by using appropriate planning models and relevant numerical and financial analysis was so that the findings could then be used to support discussion of the issues. Marks were awarded for discussing the different aspects of an issue and its impact on the company and also for providing appropriate alternative approaches to resolving it. The alternative approaches received higher marks if they were accompanied by a valid rationale as to why they were being put forward and consideration given to their advantages and disadvantages. Candidates received reward for an in-depth analysis of the issues raised, including incorporating the results of accurate numerical and financial analysis. Consideration of alternative approaches to resolving the issue was an essential element of the analysis. Repeating the facts of the case, without any analysis, was not helpful to the reader of the report and received little credit. The Judgement criterion was extremely important as it provided the opportunity for candidates to fully analyse the issues contained in the case. It was essential that sufficient time and effort was put into carrying out this critical analysis. It was not sufficient for candidates to simply repeat the facts of the case and regard that solely as his or her analysis or to only explain the impact of the issue and not what alternative action could be taken. Similarly, it was not enough for candidates to simply suggest possible alternatives to resolving the issue without carrying out a proper evaluation of the suggestions being made. The alternatives needed to be analysed in depth. The facts of the case, together with their supporting calculations, should have been used as evidence to support the discussion as part of candidates analysis of the issues. It was essential that candidates stated the impact and discussed the accurate financial implications of alternative actions for the case company for each particular issue, providing evidence where appropriate. These were some common errors evident in candidates answers: Once again, many candidates believed that the net present value represented profit. This is a fundamental mistake and one which has been pointed out in PEGs many times before. Simple repetition of the case material without any additional analysis. Failure to discuss all the issues prioritised. Serious lack of analysis of the issues including not discussing the numerical or financial implications some of which, for example the fuel efficient engine, had been calculated with reasonable accuracy. Discussing issues without preparing the relevant numerical or financial calculations. This particularly applied to recommending a course of action relating to the production plant relocation without first calculating the NPV differential. Brief discussion of alternative actions and little comparison of the overall advantages and disadvantages of each of the alternatives, i.e. with no support analysis to back-up the suggestion being made. In addition, the following main errors were made in respect of this particular examination: 8 T4 Part B Case Study Exam Post Examination Guide - November 2014

9 Plant Relocation: Weak analysis due to very poor calculations Many candidates used the Johnson, Scholes and Whittington SAF analysis technique in commenting on this issue but failed to recognise that it was necessary to do this for both possible locations rather than just the west. Consideration that EL would be subject to exchange rate fluctuation by building in the west. This showed either a lack of understanding of the case material or sheer carelessness, given that the west and east were both in the same country and shared the same currency. Too little concentration on the differential costs. Fuel Efficient Engine Failure to explain the expected values of the net present value calculations. Failure to recognise that the difference in the expected values between the two techniques was immaterial. Failure to recognise that EL needed to increase the skill levels of its employees to compete with other manufacturers. Supply Chain This was generally discussed satisfactorily, but many candidates missed the importance to EL of receiving quality materials to work with. Failure to consider the benefits and disadvantages of single compared with multisourcing of supplies. Failure to discuss the purchase scoring system at all. It was very important that candidates concentrated on the issues contained in the actual case and on the unseen material. If the issues in the unseen material were fully considered, with good numerical and financial analysis where appropriate, then alternative approaches which might have been adopted by the organisation would have flowed from this and could be proposed with the benefits and disadvantages of each set out. There was no single right answer to the issues posed in the examination and credit was given for candidates analysis even if this did not correspond with the suggested answer. Lack of indepth and accurate analysis, especially accurate financial analysis, caused most candidates to fail the examination. Ethics Strategic choices: Candidates were required to use judgement to identify and analyse the ethical issues and state why these issues had ethical implications. This section was normally coupled with the recommendations on how to resolve the ethical issues. It was acceptable to provide the answer in one section or it could have been split over two as presented in the Assessment Criteria. The reason it was split in the Assessment Criteria was because the business issues usually had an ethical dimension associated with them. Marks were awarded for recognising each of the ethical issues and then it was crucial to explain what the ethical dilemma actually was. 9 T4 Part B Case Study Exam Post Examination Guide - November 2014

10 On the whole, candidates were able to identify the main ethical issues but the explanation of the real ethical dilemma was often weak. Again, many candidates confused the ethical with the business issue. There were some candidates who did not discuss ethics at all. This was a very dangerous strategy as the Ethics criterion was worth 10% of the marks for the examination. Many candidates failed to recognise that the real ethical concern regarding the village relocation was that EL had refused to pay compensation on the grounds that it had not itself received this promised funding from the government. Regarding the failure to supply records issue, many candidates did not recognise that the ethical issue was that Mr. P was not acting objectively by accepting meals and being entertained by a particular supplier which was the reason for the ethics code being established in the first place. His insistence that he had not seen the code could not actually be refuted from the information contained in the case. It was possible (although unlikely) that he had not seen the code. Further, the action of his manager in not responding to your request was not in itself unethical and was really a separate issue. Some issues raised by candidates were spurious and although given credit within Judgement and Logic, were not considered in themselves to be ethical issues. For example, the outdated supply chain weighting was regarded by some candidates as an ethical issue when it was clearly a business issue. Reputation of EL was not an ethical issue. It was a business issue. This point has been made repeatedly in PEGs but it was still cited by candidates in this exam session. Impact on reputation may be stated as a potential consequence of an unethical activity taking place, but, in itself, it was not the ethical concern. The activity itself was the ethical issue and candidates needed to explain why there was an ethical dilemma posed by the issue. Once again, many candidates only discussed one ethical issue. This limited the marks which could be awarded. Recommendations Logic: This criterion tested whether candidates were able to make well-justified, commercially sound recommendations for each of the prioritised issues. It was important that candidates ensured that there were strong reasons provided for the recommended course of action. The recommendations should have followed on from the weight of arguments and choices of possible actions in a logical manner. It was expected that candidates presented their recommendations, provided a justification of why these courses of action were being recommended and then stated what should have been the follow-on actions. It was essential that each recommendation was commercially sensible and realistic and based upon accurate supporting financial analysis. Marks were awarded not just for the recommendations themselves but also, crucially, for the rationale and strength of argument supporting them, drawing from the earlier analysis of the issues and for explaining what the organisation should do next to make the recommendations 10 T4 Part B Case Study Exam Post Examination Guide - November 2014

11 happen. Marks were not awarded to candidates for recommendations which merely repeated what had been said earlier in their discussion of the issues. The recommendations section should have been used to provide very clear recommendations drawn from the analysis and discussion earlier in the report. The candidate should have produced a range of alternative approaches to resolving an issue in the analysis and discussion. Recommendations should have been clear, concise, justified and then should have led to relevant follow-on actions. Candidates should have selected their recommended action from the options discussed earlier in their report. Often candidates were vague in their advice or recommendations were presented with no justification which was no help to the report reader. Recommendations such as delay the decision, do something about, more controls are needed, the Board should meet to discuss, the Board should review, appoint a consultant to review, lack clarity, were evasive and therefore were not acceptable. It was very important that the report made appropriate clear recommendations and did not leave any of the issues undecided. It was for candidates to present all the arguments for and against a course of action and to assess each carefully to reach well considered recommendations. It was the depth of discussion and the strength of arguments and the justification behind the recommendations that earned marks. Ill-thought through analysis and poor recommendations were not rewarded. Recommendations were given credit even if they were not consistent with those in the suggested answer. It was the rationale for the recommendation which was important. The follow-on actions needed to be consistent with the recommendations. Candidates are referred to the suggested answer to see clearly how recommendations should have been presented. It is recognised that the suggested answers are far more thorough than would be expected from a candidate s script in the examination as it is intended to be a teaching document as well as an answer to the particular case study. The recommendations should have followed the analysis and discussion and therefore sufficient time should have been allowed for the recommendations to be prepared. Some candidates rushed their recommendations because they had not left sufficient time to present them fully or in some cases did not present any recommendations at all for one or more issues. Marks could not be awarded if there was nothing presented. Many of these common errors were again evident in this examination: Time management issues with some recommendations being very short. Straight repetition of what had been said in the earlier discussion without sufficient amplification of why a course of action was being recommended. Some candidates produced a weak rationale or no rationale at all, for their recommendations which did not address the issue. It was essential that candidates explained the reasons for their recommendations. Failure to provide recommendations on all the prioritised issues. This may have been due to time constraints and was therefore a feature of poor time management. Recommendations which did not follow on logically from the earlier discussion within the report. Making recommendations without undertaking any numerical or financial analysis at all where it was clear that such analysis was essential. Recommendations which were inconsistent with the advice given under the Ethics criterion. The following points are made with specific reference to this examination: 11 T4 Part B Case Study Exam Post Examination Guide - November 2014

12 Proposing that the plant should be relocated in the east despite overwhelming financial evidence, often presented by the candidate, indicating that the plant should be relocated in the west. Recommendations that the whole plant relocation proposal should be abandoned altogether without consideration of the impact on production. Failure to elaborate on any firm recommendations within the Strategic Direction issue, for example providing a clear rationale why EL should have pursued more advertising and promotion. Similarly, failing to give a clear rationale for selecting either the high tech or low tech technique for the fuel efficient engine. Many candidates seemed to think the supply chain issue was simply a matter of advising EL which of suppliers A and B should be engaged as a single source. This was not the case at all. The FD asked candidates to report on the advantages and disadvantages of single and multi-sourcing of products. The issue contained much more content than was given credit by many candidates. The recommendations were an essential part of the answer and candidates should have allowed sufficient time to address them fully. Candidates should also have thought about what they were actually writing and asked themselves the simple question, Does this actually make sense and is it consistent with my earlier analysis? Integration: This criterion related to the overall functionality and quality of the report in part (a). This was not a section of the report, but related to the report as a whole. As a guide therefore it was important that candidates presented a report which was clear, sectionalised, addressed the main issues with good analysis and discussion and made suitable recommendations based on the weight of evidence presented. Reports were deemed to be highly professional, sound, satisfactory, inadequate or poor. The whole 5 marks were available for a highly professional report and 0 or 1 mark for a poor report. Good answers tended to divide the report into the following distinct parts: Table of contents Brief terms of reference A brief introduction Prioritisation of the key strategic issues A detailed analysis of the issues Ethical issues (which may be in one section or split across the detailed analysis and the recommendations) Recommendations Appendices including part (b). It was important to effectively integrate the different parts of the report. So, for example, the recommendations should have included the evidence base supporting them by reference to the earlier analysis (including financial and numerical analysis and discussion of the 12 T4 Part B Case Study Exam Post Examination Guide - November 2014

13 alternative actions). This may have been drawn from the main body of the report and the appendices. A low mark was awarded in Integration if the key issues were not properly addressed, or indeed were not discussed at all and the report was left incomplete. Further, a low mark was applied in Integration if analysis was not sufficiently carried out, for example, the discussion of the issues was vague and generally superficial in nature and did not specifically relate to the unseen case material; numerical analysis was weak or contained errors of principle or was not undertaken at all. In particular, errors in calculations or, not attempting the calculations at all, would be likely to result in a low integration mark. Reports which did not address the main issue satisfactorily or provide sufficient depth of analysis or reasoning behind the recommendations were not rewarded with a high mark under this criterion. Vague recommendations or the candidate not committing to a particular course of action was not well rewarded because this was not helpful to the reader. A further common error related to incomplete reports with not all of the prioritised issues discussed or some recommendations omitted and this led to a poor Integration mark. Ethics - Recommendations: This criterion judged candidates on their recommendations and reasoning for each of the ethical issues identified. This section followed on from the identification and explanation of the ethical issues. It could either have been contained in one complete section or split over two as presented in the Assessment Criteria. Marks were awarded for the quality and depth of the advice given and the rationale for the advice offered for each of the ethical issues discussed. Candidates generally tended to give sensible advice on the issues raised in the report although this advice sometimes lacked depth. A common error was that some candidates failed to provide any advice on the ethical issue raised or that the advice offered was vague. The advice itself had to be ethical and would have become clear when the ethical dilemma was fully understood. Candidates needed to ensure that their advice was consistent with their recommendations for the main business issues that they had provided within Logic. The advice itself needed to be sound and logical. The following common errors were apparent within this examination: Just discussing one ethical issue which limited the marks available. 13 T4 Part B Case Study Exam Post Examination Guide - November 2014

14 Recommending that Mr. P be sacked was not in itself ethical advice as there was no firm evidence that he had lied or acted consciously in contravention of the code. Recommending that the village be left unspoilt despite the acceptance by the government of EL s possible development on the site. The ethical issue was really about the lack of compensation to enable the villagers to continue their lives elsewhere. PART (b): The purpose of part (b) was to test candidates ability to communicate in a competent professional way their analysis, findings and the financial implications relating to a particular issue contained in the unseen material. Candidates should have considered carefully the actual requirement, the purpose of the communication, for whom it was intended and the salient points that he or she wished to communicate. This meant that the candidate needed to think carefully about the major points which needed to be included in the communication. Thought also needed to go into the effectiveness of the communication which meant that it should have had clarity, been to the point and not ambiguous or verbose. Candidates should have followed the instructions or requirement for part (b). In this case, the candidate was asked to prepare an on the importance of correctly identifying relevant costs for financial decision making in EL. The should have included reference to the decision regarding investment in the new production plant. The should not have exceeded 10 short sentences. Marks were awarded on the strength of the communication provided and whether it actually did what had been asked for and conveyed the information in an appropriate manner given the audience. Once again some candidates chose not to attempt part (b) at all. The common errors were: Failure to do part (b) at all. Failure to restrict the sentences to 10. Failure to provide short sentences. Failure to include any financial information from the candidate s own analysis. Failure to address all the parts of the question. Failure to explain the concept of relevant costs leading to the conclusion that the candidate s own understanding was seriously flawed. Failing to explain the importance of correctly identifying relevant costs for financial decision making in EL. Referencing everything the candidate could think of whether it addressed the issue of relevant costs or not. To re-iterate what has been stated before in previous Post Examination Guidance reports, it should be understood that employers have made it clear to CIMA that they seek candidates 14 T4 Part B Case Study Exam Post Examination Guide - November 2014

15 who are not only competent in management accountancy but are also able to communicate effectively. This is the main reason why part (b) existed in the T4 case study examination. 15 T4 Part B Case Study Exam Post Examination Guide - November 2014